The telecoms industry was speaking with one voice at the 30th Telecommunications and Digital Economy Summit in Santander on Monday this week. My speech followed an executive panel with the CEOs of Orange, Telefónica and Vodafone and their commentary about Digitization in Europe sounded very familiar. That’s a good sign and in line with what we have seen in July with the 5G Manifesto – but good signs are not enough: Europe has a lot of homework to do in terms of catching up with markets like the US, China, Korea and Japan, and my call to action from last years’ Santander Summit is still very valid.

The risk of falling behind these markets in digitization and becoming a digital laggard is a major threat for Europe. Digitization is not marketing hype. It has already started to penetrate many aspects of our lives and the economy at large. Being late in this respect means that Europe is risking its economic success and technological independency as we see it already today in certain areas. We may still be successful in building cars, but players from outside Europe will sell mobility. We will probably build smart cities in Europe, but the cutting edge technology to power them will come from abroad – unless we act now.

How can we create a virtuous circle for Digitization in Europe, a major driver for prosperity?

Fragmentation is probably our biggest burden. The 500 million inhabitants of the European Union bear decent economic potential, but we need the Digital Single Market to leverage this potential. We need predictable and harmonized regulation, which creates an investment friendly environment. Europe needs massive investments in infrastructure. According to Commissioner Oettinger, EUR 600-700 billion of investment in digital infrastructure would be required for Europe to catch up. Spain was flagged up during the conference for doing an excellent job on the deployment of fixed ultra-broadband access technology thanks to smart local regulatory framework decisions. Their achievement appears to be more an exception than the rule – still it’s a powerful signal that it is possible to switch on the investment engine by creating the right frame conditions as it is so urgently needed. Just consider the decline in mobile revenues from operators in Europe, which have fallen by 34% since 2008. Meanwhile operators in the rest of the world saw revenues increase by 40% in the same period. So where do you think operators invest more?

But Europe must do more than invest in infrastructure. Digitization requires infrastructure but equally important is investment in the development of new applications and services. We can build on the strong position in many vertical industries across Europe to innovate and transform to digital. However, the level of both corporate R&D spend in Europe, as well as the available venture capital has declined in Europe compared to 2007. In the same period of time, venture capital investments have more than doubled in the US (OECD, Statista). Europe must produce new digital services, new applications, and innovative business models – otherwise our region will be building the roads for other regions’ vehicles.

Let’s create more Silicon Alleys

Since digitization affects all industries, we must leave our silos and innovate together: telecommunications vendors and operators, vertical industry players – big enterprises and start-ups. Europe should not try to copy Silicon Valley, but rather create innovation hubs – “Silicon Alleys” – like Berlin for e-commerce or London for fintech. There are some positive examples, but Europe needs more.

Nokia initiated ngConnect a few years ago, an ecosystem for digital innovation ignited by ultrafast connectivity. Over 300 companies have joined and together developed interesting concepts and trials in areas like smart cities, smart home, gigabit campuses, and tele-medicine. Our next ideation session is in 2 weeks in Munich with participants from different companies representing the automotive ecosystem. The group is going to explore tomorrow’s applications based on high speed connectivity which will transform this industry’s business model. I invited the attendees at Santander to take Europe’s future in their own hands and join this open innovation ecosystem, from Europe to Europe and from Europe to the world.

Let’s join forces to make Europe stronger and fit for a self-determined digital future!

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About the author

Markus Borchert

Markus is Senior Vice President Market Europe, Nokia and President of DIGITALEUROPE. With 20+ years of international experience in the telecommunications, IT and IT Services industries, Markus is passionate about driving change, innovation, customer satisfaction, strategic breakthroughs and business turnarounds. He has 3 kids and loves golf, mountain biking and skiing.